Zhonghua's Case Study On San Laida's Audit Failure

With development of capital market,accountants and firms' functions have been unprecedentedly magnified.This also represents an increase in people's demand for auditing.Third parties to increase confidence in corporate investment,and also through such intermediaries to see through the authenticity of this corporate information,at this time,the need for audit quality has increased.However,in recent years,there have been frequent audit failures,which has reached another staged climax,which has caused an unprecedented credit crisis in the CPA industry that has always been regarded as the "economic police" of the capital market.The functions of accountants are in doubt,the credibility of certified public accountants begins to decline,and the reputation of accounting firms begins to suffer.This means that the failure of audit will not only damage the economic interests of stakeholders and cause economic losses,but also cause certified public accountants and The firm had an unprecedented credit crisis.Therefore,it is of great practical significance to analyze the causes of audit failures and discuss countermeasures for audit failures.St.Laida is a case of audit failure in 2019.The Zhonghua firm it hired has received widespread attention because of the "two fines a year" issued by the Securities Regulatory Commission in the Yabate and St.Laida cases.However,Sunrayda itself is involved in industrial transformation,and financial litigation involves false litigation and government subsidies.The means are different from traditional fraud,and it is a relatively new challenge to audit institutions and accounting firms.Thinking,in this respect,its research is novel.This article uses a case study method to sort out the relevant literature on audit failure and define the concept of audit failure.Based on risk-oriented audit theory,fraud triangle theory and audit conflict theory,The process of failure was reviewed,and the reasons for the failure of the audit were analyzed from the aspects of certified public accountants,accounting firms,audited units,and industry regulatory authorities,and on this basis,countermeasures were proposed.As far as the audited unit is concerned,the internal governance level and risk prevention capabilities should be improved,and the construction of the internal control system should be improved;for certified public accountants,risk assessment and risk response should be strictly based on the risk-oriented auditing theory,while strengthening the practicing ability and independence;As far as accounting firms are concerned,they should carefully choose audit clients,improve business quality control systems,and strengthen internal management;as far as regulators are concerned,they should strengthen the legitimacy of laws and regulations,increase the intensity of administrative penalties,and improve firm engagement system.